“The speed and flexibility is breathtaking” – But in a good way?

There has been a lot of buzz over last Sunday's New York Times article “How the U.S. Lost Out on iPhone Work.” It's good to see issues of manufacturing competitiveness talked about in the media and among my Facebook friends who usually aren't talking about factories. So why aren't iPhones assembled here in the U.S.? Apple used to build Macs in California. I used to work for Dell when they built PCs in Texas. Now, Apple products are made by Foxconn in China and the Dell factory in Texas is now closed. My iMac, my Kindle Fire, and my iPhone – all made in China – in some conditions we would never tolerate here.

The NY Times article points out that producing in China isn't just about low wages. It seems to me that it's about the unfair advantages of a country where workers aren't free. I'm all for companies making profits, but I wish those profits didn't have to be made on the back of people suffering under the tyranny of a repressive, totalitarian, “Communist” government.

Yeah China can move fast, but at what human cost?

From the NY Times article, one part that still has me a bit angry (which kept me from blogging about this, since I try to avoid blogging when angry):

One former executive described how the company relied upon a Chinese factory to revamp iPhone manufacturing just weeks before the device was due on shelves. Apple had redesigned the iPhone's screen at the last minute, forcing an assembly line overhaul. New screens began arriving at the plant near midnight.

A foreman immediately roused 8,000 workers inside the company's dormitories, according to the executive. Each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing over 10,000 iPhones a day.

“The speed and flexibility is breathtaking,” the executive said. “There's no American plant that can match that.”

What the Apple executive gushes over makes me cringe and hurt inside. I believe people deserve freedom. Being forced awake and marched en masse into a factory to make iPhones seems pretty close to prison labor conditions to me. The counter argument is “well, these people wouldn't have jobs otherwise” rings hollow to me. We have to hope that people can have better than the minimally tolerable conditions, regardless of where they live. As the argument goes:

Without Foxconn and other assembly plants, Chinese workers might still be working in rice paddies, making $50 a month instead of $250 a month (Kristof's estimates. In 2010, Reuters says, Foxconn workers were given a raise to $298 per month, or $10 a day, or less than $1 an hour). With this money, they're doing considerably better than they once were. Especially women, who had few other alternatives.

Of course “no American plant can match that,” as the Apple exec says. It's not that American workers are lazy. We just enjoy living in our own home instead of being packed like sardines into a company dormitory and we enjoy a luxury called work/life balance (so says the guy here who gets picked on for working so many jobs and blogging all the time, but I love that I do).

Unsafe and bad conditions

Update on March 16, 2012 — This American Life has retracted their episode #454 with Mike Daisey, as Daisey apparently made up or embellished some details of his story. That doesn't, however, make everything untrue.

Living within dormitories inside the factory walls, employees are packed into 144 square foot (12-by-12) cement rooms with 15 beds stacked up like bunk-beds. Employees are often placed into rooms where they do not know anyone as well.

Any attempt at forming a union is met with arrest and a prison sentence as unions are illegal within China.

Workers cleaning iPhone screens used a chemical called hexane, specifically because the chemical solution evaporates faster and allows the production line to speed up. However, hexane is a neuro-toxin. Inhalation of hexane causes mild euphoria, followed by nausea and headaches. Repeated exposure causes extensive peripheral nervous system failure, a result that Daisey spotted as the hands of the workers on the line shook involuntarily.

Five percent of the workers Daisey spoke to were underage, some as young as twelve. The children working at the factory mentioned that Foxconn doesn't check ages and shifts older employees to the front line when inspections occur.

The standard working shift at the plant lasts 12 hours, but that's pushed up to 16 hours when Apple is getting ready to launch a new gadget like the upcoming iPad 3. However, a worker on a 34 hour shift dies while Daisey tours the facility.

On the factory floor, there's no talking allowed among the 20,000 to 30,000 workers. There's also little machinery on the floor since labor costs are far lower than machines. However, Gau has stated publicly that investing in advanced automation is a high priority.

Workers that have developed severe carpal-tunnel issues from repeating the same process over and over are simply fired. Foxconn could eliminate this issue by rotating jobs between employees, but they do not.

Workers that get severely injured on the job are fired without any severance and workers that complain about working conditions are fired as well as black-listed with all companies that operate within Shenzhen.

America can't match any of that.

There's a lot to absorb from the above bullet points. Looking at the n-hexane issue… the factory was choosing to use a more dangerous chemical because it was FASTER than the readily available alternative.

Faster or safer? Easy choice, right?

Read that again and think about that. Faster trumps safer.

They could have used rubbing alcohol, but they chose faster over safer. They've now supposedly switched away from n-hexane (thanks, Apple!), but who knows if that's true. It might be true when inspectors are present (more on that later). To be fair to Foxconn, it was a separate company, Wintek, that was using n-hexane and hurting workers. Apple forced some of the changes, but how many other problems go undiscovered and unfixed? Apple is doing something and they argue they are doing more than others — but is it enough?

Daisey's report says independent unions (or “secret unions”) are illegal in China. I'm not the biggest fan of unions, but you should have the right to form one in a free country (and companies should be free to move to right-to-work states). If you can't form a union in a supposed socialist worker's paradise, the world is upside down. For all of their current-day problems, it's undeniable that American labor unions have led to safer and better working conditions for all in this country. So, I guess the ultimate revenge from factory owners came in moving so many of these jobs to a country with, shall we say, less demanding standards.

No wonder American can't compete when safety and ergonomics are lower priorities than production line speed and fast ramp ups. Now, Mike Daisey could be full of crap, but he claims to have “gone to the gemba” at Foxconn, something I have not (and the experts cited in This American Life couldn't dispute much other than Daisey maybe overstated the number of underaged workers).

Other unfair advantages

Beyond the safety issues, Apple and Foxconn receive other advantages from the Chinese government, including subsidized factories that are built for companies that haven't yet decided to build products in China.

Another critical advantage for Apple was that China provided engineers at a scale the United States could not match. Apple's executives had estimated that about 8,700 industrial engineers were needed to oversee and guide the 200,000 assembly-line workers eventually involved in manufacturing iPhones. The company's analysts had forecast it would take as long as nine months to find that many qualified engineers in the United States.

In China, it took 15 days.

America can't match that.

I'd have to check with the Institute of Industrial Engineers (of which I'm a member) to see how many unemployed IEs there are in the U.S. Apple could find that many engineers in the U.S., but it might take too long (or those engineers might be too expensive). Another advantage in China is that they could basically force 100,000 technical college students to move to another city to work in a factory. Nope, the U.S. can't match that. As I discussed this NY Times piece on Twitter, one person replied “These workers choose to work there.” Do they? Do they?

Chinese newspaper China Daily reports 100,000 pupils visiting vocational schools in the province of Henan are being forced to work at Foxconn'sShenzhen plant.

Pupils were informed on the 17th of June that they had to pack their bags to head up north in nine days, by command of the provincial government. Should they not follow orders, they would be kicked out of school – so kids training to be locksmiths are being forced to work for Foxconn…. On top of it all, a civil servant added the provincial disgovernment gave “internal orders” stating towns had to send off 100 people aged 18 to 45 to Foxconn… A further source said 300,000 people are supposed to travel from Henan province to Foxconn's plant in Shenzen.

Because 31 years ago, when Deng Xiaoping carved this area off from the rest of China with a big red pen, he said, this will be the special economic zone. And he made a deal with the corporations. He said listen, use our people. Do whatever you want to our people. Just give us a modern China. And the corporations took that deal, and they squeezed and they squeezed. And what they got was the Shenzhen we find today.

America can't match that.

I believe in free trade. But, I'm starting to turn to the side that thinks we need “fair trade” where my devices and gadgets aren't leading to child labor and people being harmed or killed due to 19th-century (by our standards) working conditions. Things seem pretty disgusting at Foxconn. Thank goodness nobody referred to them as “lean” because that would be the furthest thing from the truth. China doesn't need Lean, although there are rumors that Lean Manufacturing has a future in China.

But Apple has a policy and audits…

Apple puts on a good face that they have supplier standards and that audits are performed to try to ensure that things are done properly. New CEO Tim Cook says:

No one in our industry is driving improvements for workers the way Apple is today.

OK, but maybe they still aren't doing as much as they could.

He adds:

We insist that our manufacturing partners follow Apple's strict code of conduct, and to make sure they do, the Supplier Responsibility team led more than 200 audits at facilities throughout our supply chain last year. These audits make sure that working conditions are safe and just, and if a manufacturer won't live up to our standards, we stop working with them.

It seems unlikely Apple, and other electronics companies, will stop doing business with Foxconn, even if they have stopped working with some who break the rules. They can't break with Foxconn. No other manufacturer has the scale and size to make products that sell at such high volumes. No country with freedom and good working conditions can match Foxconn's “breathtaking” capabilities.

Using audits to ensure good working conditions is like the failed approach of “inspecting in quality” when manufacturing something. As this article points out:

Han praised Apple for agreeing to random inspections. “Oftentimes, the company knows when an inspection is coming and they plan for it by constructing a new plan to circumvent the inspection or reducing the number of employees,” she says.

The outside companies do have inspections, but workers told me Foxconn always knows when there's going to be an inspection. So what they do then, they don't even check ages then. They just pull everyone from the affected line, and then they put the oldest workers they have on that line.

… in my first two hours of my first day at that gate, I met workers who were 14 years old, 13 years old, 12.

Do you really think Apple doesn't know? In a company obsessed with the details, with the aluminum being milled just so, with the glass being fitted perfectly into the case, do you really think it's credible that they don't know? Or are they just doing what we are all doing? Do they just see what they want to see?

“We've known about labor abuses in some factories for four years, and they're still going on,” said one former Apple executive who, like others, spoke on the condition of anonymity because of confidentiality agreements. “Why? Because the system works for us. Suppliers would change everything tomorrow if Apple told them they didn't have another choice.”

Final thoughts

I guess I'm a big awful hypocrite for typing this on my MacBook Air – a product a love, produced in working conditions that I hate. I'm all for corporations – but it's sad when companies that exist due to freedoms provided by some governments make money on the backs (and twisted carpel tunnel-y hands) of those who do not have such freedoms. Maybe it's true that capitalist companies are truly Soviet in nature.

This is such a complication situation that leaves me and many others I've chatted with this week very conflicted. You feel bad for the workers, but you love your gadgets. You want to shake your fist at Apple, but they're not the only ones involved. You'd like to think you could do something, but maybe this is just the way works. There are no easy answers. Just an uneasy feeling.

Excellent piece Mark. I read it on my iPad. I’m more confused than conflicted. Prison conditions? So why don’t we apply the Foxconn model right here in River City? We’ve privitized prisons in the USA? Why can’t they become work houses?

Mark:
It can’t last. Where there is no respect for people (that’s the heart of these sad stories, from my perspective) there is no sustainable advantage. Sometime, these people will gain control of their destiny and things will change. When? With what level of pain? I’m sure I don’t know. It probably won’t be pretty, involving upheavals on a scale far greater than Foxconn and Apple.

In the meantime, I’m happier than ever to draw my value stream maps and A3 reports with pencil and paper!
-ALB

You are right, Andrew. Someday it WILL be different. We fought a four-year bloody civil war to make it different when we abolished slavery. The Cambodians, with Vietnamese help, threw out the Khmer Rouge but not before they had killed a million of their own citizens. What will the Chinese people choose to do?

Meanwhile, Iraq is devolving back into its wars between religious interpretations (Sunni/Shi’a) after we got 4000+ of our own people killed and tens of thousands maimed, wounded and mentally battle scarred, spending over one trillion dollars doing it, with an untold cost until those troops die in continuing medical coverage to treat their infirmaties. And we aren’t out of the mess in Afghanistan, yet.

When will we learn that cultures and societies progress or regress and should be allowed to do so without us thinking we have to ‘make it right’? We have plenty to do here, like closing the achievement gap between Black/Chicano and White/Asian in our schools. Not to mention fixing the broken public education system, reforming our entitlement systems, fixing our decaying or non-existent infrastructure (Korea has more high-speed internet available to their citizens than we do), etc.,. etc., and etc. Mark and I have been going around on this on another of his blog’s sites. Be well and do your A3’s in pencil. Another whack with ballpeen against the system. But few will have the consciousness to eschew their Apple or other electronic products. This is being done on an eMAC. We’ve been Apple since the IIe.

Amen, Mark. Well-said on all points. I recall sometime ago Bill Waddell on Evolving Excellence mentioning that China is a powder keg waiting to explode (pardon me, Bill, if I’m misquoting you). This piece makes that possibility all the more clear.

A very evocative piece Mark. Slavery doesn’t quite feel like slavery when it happens thousands of miles away does it?

Companies who drop out of home manufacturing to dodge legislation designed to protect basic human rights is a shrouded return to the Victorian era. I’d like to see organisations that live their values globally and not just in the home job market to collect the ‘Investors in People’ badge and pass legislation.

The easy solution is vote with your feet and purchase from another source but it’s difficult to ascertain those sources when they don’t have to declare how they discharge manufacturing overseas. In any case would consumers purchase a more expensive option to uphold their beliefs? I bet those that would are few and far between.

I find it really ironic that people seem to care more about the treatment of farm animals. There’s a program for food called “Certified Humane” that I see on some products I buy (always noticed after the fact, I don’t buy it for that reason, per se).

Ironically, Terry Gao referred to human employees as “animals” (technically correct, we are not robots). Do we justify the bad treatment of zoo animals by saying “well, the alternative is that they get eaten in the wild?”

Kudos, Mark, to pointing out the info here and reminding people to take a look underneath. There’s a massive cult following of Apple enthusiasts, but I believe the Apple as we know it is unsustainable. There’s been much out in the blogosphere lately about Apple’s practices, and how their iconic product innovation will bed undermined by a lack of process innovation.

Mark,
If their products didn’t spend six weeks on the deck of a container ship between China and the US or Europe, perhaps they would have “the flexibility” to wait until morning to start installing the new glass. ;-)

Great point, Andy, but doesn’t Apple use a lot of air freight because iPhones and iPods are so small and so light? They probably cube out well in air freight containers. I know when friends have posted their FedEx tracking, it was all air from Shenzen in a few days:

I guess so, at least in the days around launch. Odd cost choice for a product that’s largely un-customized. Maybe they could afford to pay more for labor if they weren’t flying them around all the time. ;-)
I suspect air freight is not their standard method.

Mark – excellent article and you echo a similar angst that I felt myself reading the NYTimes article. However, I disagree with one of the citations – US did not lose manufacturing jobs because of the widening trade deficit as the Huffington Post says. Instead, it is the other way around. The trade deficit grew because US jobs moved to China.

Certainly, some of the things that are possible in China but inhuman in American factories are attributed to the governance and the fact that Apple and Foxconn could get away with it. The only way you and I can influence any outcome is to temper our thirst for Apple products. I will wait longer than before to acquire my next Apple product.

I’m really glad you’ve been Tweeting and sharing this information and compiling it into this blog post. It’s a really good read and I will share it.

I’m gonna semi-sorta hijack this comment thread for a similar line of thinking in a different industry.

There is a parallel between the sports industry and operations in China. The mindset of cheap labor and “lean = cost cutting” exists in sports as well. I’ve worked seven straight days in a homestand for a minor league team, from 8 a.m. to 11 p.m. each day. As an intern, I was paid poorly ($500 per month, without living quarters provided). If proper labor and safety practices are not adhered to, operators won’t jump up to create a fuss because a) “sports” is a sexy industry and you’re lucky to be in it at all, and b) if you create a fuss you’ll be labeled a pariah and will have an even BIGGER hill to climb to get back into the industry. For the front line workers in concession stands, obedience is key if you want to last.

That said, sports organizations are starting to look at ways to better serve the customer and hopefully this will be the start of changing their definition of lean from merely “cut costs.”

(The worker strife in sports is nothing compared to what occurs in China, and it is certainly a societal and economic problem that will require many generations to fully overcome. I merely wanted to point out the parallel.)

Another sidebar – the Demand Progress push against SOPA and PIPA has been absolutely amazing, and to see a significant organized effort on behalf of overseas labor practices would have an even greater social impact. Unfortunately, the “alternative” reality of the end result might be a big piece that holds such an effort back. Compare “Yay, I can share YouTube videos!” to “Oh, wait, now I have to pay 3x as much for the new iPhone?”

I don’t think we’re hypocrites because we use iPhones or iPads or Kindles – I don’t see any alternate options available. I’d prefer to use an American-made smartphone, if a) one existed and b) it provided the necessary functionality I require.

I hope we start to see a big push for domestically-manufactured electronic goods.

There are many industries (including the entertainment industry) where those at the bottom rung of the ladder get abused (unpaid internships, etc.) because there are far too many people willing to do that work for free.

I think it is good to pressure companies that are not doing as much as they should.

I believe Apple is trying to improve things and has improved things over the last 10 years. I think they have been doing more than many USA companies have. Could they have done more? Yes. Should they have done much more? Yes.

How harsh are the working conditions on those dangerous jobs (Alaskan crabbing…) shows on TV. They seems pretty bad to me (though I have hardly watch any, maybe I am wrong). But they are paid a lot, potentially, so is that why it is ok?

Things are not as easy as something seems inhumane to us, therefore it should be banned. As I said, I do agree we should pressure these companies and they should be trying themselves, I just think things are not as clear as people want to think.

Most of what I have read says in top tier plants (used by American and European companies that actually care like Apple, Nike, Dell…) have very little child labor today. Essentially none, but there are millions of people, and likely some child labor slips through but most experts seem to say that is very limited (and was eliminated because of demands from Apple and others). Those experts will admit to many other bad practices not being addressed properly: too much mandatory overtime, failure to pay for all overtime… And the abuses are much worse in plants where the buyers are not paying attention so there is plenty of child labor there.

Apple’s success actually creates new moral dilemmas for them. They actually have the resources to build stuff themselves. Owning the factories like Toyota does. In doing that they could control the situation much more. That hasn’t been their business, for awhile though. It would be a big change. They would still have to buy lots of components.

Apple also has so much profits they can easily afford a team of 50 full time auditors and expert advisors going to factories and supplies to those factories and monitoring what is happening. I think they should. Auditing to make sure humane practices are in place and also helping companies understand what is expected and helping them create systems to assure abuses don’t happen. Also they should use long term supplier relationships to assure this process is successful.

I also think that American companies shouldn’t allow CEOs and senior executives to take so much of the companies money to build their personal vanity castles etc.. Boards don’t seem interested in protecting the company from looting by CEOs (instead they actually voice their support for it) or in paying much attention to the workers responsible for making the companies successful (employed directly or at sub-contractors).

It will be a very good thing if Apple gains respect for people and acts on that principle. It won’t mean treating everyone as though they worked in Wisconsin. But it will mean very large changes in how things are done.

These factories are wrong, Foxconn and Apple both need to think of the larger picture here instead of their wallets. Apple recorded record profits, but at what expense? The inhumane treatment of their workers? Come on…

“I feel like you do, I love Apple but don’t want to be a part of people abuse. Thanks for your articles to enlighten me. Let’s tweet “A day without Apples”. eg. Do not buy or turn on any Apple products on Feb 14, to support the Foxconn workers.”

Has anyone heard what the cost savings are because of the conditions? Would an iPhone cost $20 more or $200?

I’ll be interested to see if people really care about this issue and speak with their wallets, or if they continue to help Apple set record profits. When there’s secrecy, Apple is the only one culpable. But now, Apple’s customers share in the responsibility to change things. Every dollar that people send to Apple is a vote to keep things the way they are.

By the way–that “a day without Apple” idea is a conscience clearer, not something that will make a difference. Delaying a purchase by a day won’t send a message, it will just spike sales on the 15th. But people will feel better that they did something.

Gut check question to all: Will you be buying another Apple product if things don’t change at Foxconn? Will you stop downloading from iTunes?

I suspect that Apple will change slowly now that the issue is common knowledge, but I don’t see any quick changes unless there is real pressure. And that pressure will only come from the bottom line.

[…] Apple and many other companies, where the working conditions are quite poor. The post, entitled “”The speed and flexibility is breathtaking” – But in a good way?” generated quite a bit of discussion and a lot of ire directed at Apple by many – including […]

“Regrettably, we have discovered that one of our most popular episodes was partially fabricated. This week, we devote the entire hour to detailing the errors in “Mr. Daisey Goes to the Apple Factory,” Mike Daisey’s story about visiting Foxconn, an Apple supplier factory in China. Rob Schmitz, a reporter for Marketplace, raises doubts on much of Daisey’s story.”